Welcome words on business rates should be backed up in settlement

By Sir Stephen Houghton | 14 December 2021

It was a very welcome decision when the secretary of state told the Levelling Up, Housing and Communities Committee members that they would not move towards increased rate retention because it ‘goes against the broader principle of levelling up’ given that local authorities with the most resilient tax bases were based more in the south east. There is no doubt that councils need more funding, but some councils are not well placed to ‘earn their way’ out of deprivation.

If only we had had this enlightened attitude when these reforms were introduced in 2013! Back then I, alongside many others, warned that business rates retention would lead to an ever-growing gap between wealthier and more deprived authorities. As we at the Special Interest Group of Municipal Authorities (SIGOMA) recently set out in our alternative model for local government finance, the gap in reality has been even worse than predicted.

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